Aim-listed Ncondezi Energy has entered into negotiations with China Machinery Engineering Corporation (CMEC) and General Electric (GE) South Africa for the development, construction and operation of the integrated Ncondezi 300 MW coal-fired power project and openpit coal mine, in Tete, Mozambique.
Ncondezi on Friday said it had agreed in principle to the terms of a nonbinding offer (NBO) to enter into exclusive negotiations and conclude a binding joint development agreement (JDA) by April 30 for CMEC and GE’s acquisition of a 60% equity stake in the project.
This followed an intensive search for a new potential partner to take the lead in the financing, construction and operation of the power project.
“The CMEC and GE NBO has the potential to materially derisk the development, financing, construction and operation of the power and mine projects,” said Ncondezi nonexecutive chairperson Michael Haworth.
The JDA will set out the commercial terms for the completion of the acquisition and for the joint development and funding of the integrated project up to and including financial close, which is expected in the fourth quarter of 2018.
The agreement proposed the development of the power plant and mine projects as an integrated project to simplify the development, commercial and financing aspects of the process.
In addition, the power project’s boiler technology will return to the circulating fluidised-bed (CFB) from pulverised coal.
“The board believes that a return to CFB technology, where technical work is more advanced, will also facilitate a shorter, more cost effective route to financial close,” Haworth explained.
CMEC and GE will be responsible for the engineering, procurement and construction, as well as the operations and maintenance for the project on a build-own-operate basis.
The agreement remains subject to CMEC and GE successfully completing due diligence and agreeing to the commercial terms of the JDA.